Marcel Fratzscher, Lukas Menkhoff, Lucio Sarno , Tobias Stöhr, 23 February 2018

Central bank interventions in foreign exchange markets have long been viewed with scepticism by academics. This column examines foreign exchange interventions for a sample of 33 advanced and developing economies. Interventions occur frequently, in episodes that can last several days, and are often successful in smoothing exchange rates. These results show that central bankers, particularly in emerging markets, appreciate the efficacy of interventions.

Vahid Gholampour, Eric van Wincoop, 15 May 2017

Large numbers of traders share their thoughts about the euro-dollar exchange rate on Twitter. By identifying and classifying opinionated tweets, and constructing a daily measure of sentiment, this column shows that a trading strategy that takes long or short positions based on the forecasts of high-follower accounts provides a Sharpe ratio significantly above that of the carry trade. The methodology could easily be applied to other currencies or portfolios of currencies, as well as other financial markets such as the stock market.

Nina Karnaukh, Angelo Ranaldo, Paul Söderlind, 10 September 2015

Understanding foreign exchange markets is key to understanding the global financial system. Yet, a clear understanding of why and how foreign exchange illiquidity materialises is still missing. This column suggests that foreign exchange liquidity can be impaired in times of flight to quality and higher global risk, and that commonality increases in distressed markets.

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